Wazoo:

let me try to help as someone who has followed this board for some time and asked the same question at the beginning. Back in january/ February I came to a realization: there is nothing outside of the ibox. In fact, very little information at all.

A good example: look at the news PR a little while ago about the 52% increase in sales at one of the subsidiaries. Either Javaco or Pak-it. Note: they do nto give the sales figures, hence it is entirely misleading. Meaningless. Just an example that comes to mind. Hence the focus on the ibox. And it is not my style. I usually only invest in industries that I have diorect experience in and knowledge beyond the average person, coupled with analysis and screening.

I agree with your view. I would never invest in anything without knowing more. Unfortunately, my knowledge of Oil and Gas is limited, my knowledge of P2O is limited, and quite frankly there is very little information to go on. Hence everybody has an opinion and the debate is quite heated (and interesting...).

You are perfectly right.

I don't understand your trading logic, and I consider your philosphy typical of the majority of posters here. Why does it have to be an all or nothing (con or amazing opportunity) stock? Maybe they will just be competitive with everybody else, and not make spectacular money, but not go broke. Maybe JB is just a bit narcissistic and the opposite of conservative. Willing to take risks with other people's money. There are lots of people like this around..

The whole thing is based on a simple premise: make oil for $10/barrel and sell for $70/barrel. That likely is NOT REALISTIC. But we have no way of knowing. Don't have enough cost data and the selling price is not confirmed. Although I have more faith in their ability to sell, especially in small quantities, than their ability to produce at said price.

Either way... why take the risk? Because if they are not successful within a matter of months... that is it.. they have no solid revenue streams..

Just IMO..

you anywhere near san antonio? i got a job prospect there...

anybody ever hear of a stock with the symbol ARD (Canada) being pumped? Armada Data. I heard about it all the time about 6 months ago. Had a nice spike up, but has crashed since. Just curious... i know nothing about it except having looked at the chart. It just seemed to be getting alot of press.

those damn bashers....

the brainwashing of people is incredible. and when they are underwater, no amount of reason will have any effect, because their money is in it.. they will go down with the ship.

the fact that it was on one day made it ineffective anyway. afterwards the stock price fell.. the only poumping i have seen is on message boards, and that has been serious pumping. WOuld that work?

they are dreaming. there might be some, but lal JB has been allowed to do is test runs, from which they would get some product. not sure if they are allowed to sell it or not, and it is inconsequential anyway...

i agree. the initial movement upward is inexplicable. I think it was mid-December? However, if you look at the chart, you see a smaller pop back in August. If the upward swing that began in December was manufactured, the August pop-up could have been a little test run. I think it got manipulated up, then the pumping came hard to try to maintain that level. Perhaps they hoped JB could get it going quickly and deliver, thereby maintaining the high stock price.

but there is no direct evidence. it is one of the strangest things i have evver seen. But if the stock was being maniputlated, how would you know? There mught be some large block trades as it was going up... between accounts owned by the same guy... or between a couple of guys working together?

actually, I question whether or not they will be able to get the volume they need as well. It is not so much a cost issue, as an availability issue. And if they have to go get it or incur costs in getting plastic, it could get very expensive..

right on. like i said, feedstock is only like maybe 5% or 10% of the total cost anyway......

good post..

when pigs can fly...

You are assuming PE = 100? A bit much, don't you think? what about 10, maybe 20...

What does this post mean? This is along the lines of "Credibility is Earned". I have been thinking about that one for years. When you post negatively on a POS stock that is right up there like JBII was back in January, this is what you are told. No one is supposed to listen to you. Yet, when the thing tanks it all seems forgotten. This is especially true of JBII, which has given a new definition to the word "Tank". And then as a negative poster, have you gained massive cred when it tanks? No it seems not...

anyway, this is the latest gem:

Posted by: dart39 Member Level Date: Sunday, September 05, 2010 4:08:23 PM
In reply to: the big guy who wrote msg# 68897 Post # of 68920 Send a link via email Share on Facebook Tweet this post
BIG GUY....I rarely post, but anyone who thinks the way you do makes you get SMALLER AND SMALLER all the way DOWN!!!!!

wtf could that possibly mean?

My prediction is....

LOOK OUT BELOW!!!!!

This stock has been in anticipation of this event (the stack test) for some time. JB had it up on his slides at the AGM. And, it is tied to his compensation. Not sure who told him to do that or if he dreamed it up himself, but it reminds me of the executive that gets some product out the door without proper testing (as is commonly done in the IT world) in order that he can make his date and collect his bonus. I have been a part of these things. That is why I got out of software and especially testing.

Fact is, it is a poor milestone and not a measure of success. In fact, it is merely a detail of what they have to do.

The plain facts are:
- they have 1 line up and running, not 3. It will take another quarter to get the other two up and running, even to have a chance.
- Their cash burn rate is 1M/quarter in SG&A alone, plus the needed capital for the other two lines? In order to get the other two lines up and running they will have to borrow, and I cannot imagine any bank that would allow them to borrow money.
- no one knows whether they will be profitable or not. The only information comes from JBI and it is back-of-the-envelope quality at best. Cost accounting is an internal discipline and there are no rules (like GAAP). JB can say whatever he wants, who is to question him? Certainly not investors.
- It will be a couple of months before we know anything more about their profitiability. It will be that long before another filing, and that long before the other two lines can be brought into service. The next filing will be unspectacular, if not uninspiring, even dare I say it terrible?

The smart money knows this. The smart money has been in anticipation of this event for several months. They are short-term speculators who are looking for a quick pop, nothing more. So the pop may or may not happen. I think not. There may be a media event, which may help, but not likely. Not after the selloff we saw after that barrage of 19 press releases. There has been alot of buying and selling lately, speculators getting in and stockholders getting out. There will be no new buyers for the shares when the speculators want out, whether the stock goes up a bit or not. Hence, it will fall to .50 or .60.

Now you investors are a different lot. This stack test is like a carrot being dangled in front of you, yet success is just out of your reach, isn't it? All I can say is run harder... buy more..

ROFLMAO.

LOOK OUT BELOW!!!

totally right on. agreed.. there is stil the issue of COST, ROI and PROFIT.

it will not be "true" until financials come out and they are VERY profitable, enough to justify the stock price... just because they have a permit means nothing. It is expected... eveything else is still hype..

thanks...

did it ever occur to you guys that the DEC may have been joking when they stated that no one has ever done this before? In other words... they think JBII is a joke? in other words, what they are really saying is "why would anyone do this in the first place"?

the newly issued shares were issued aat .0008, so one would think that might be a floor..

Because I bet he realized that his first assumption of being able to sell to a refinery was wrong, and he came up with plan B.. for whatever reason... I am not interested in a company that has to worry about "survival". It is not on my list of selection criteria.

You know what the problem is here? you guys are in love with a stock, an idea. Cramer was talking about this last night, his love affair with a tech stock. His advice was: buy the Company, do not buy the stock. In his particular case, the stock died because the idea was not that new as he originally thought, the market was awash with it.

But, in all reality you have got to consider all aspects of an investment or company, like:

- financials
- history
- Product and Market

looking at the whole package, JBII is a basket case that just might make it if all that the CEO says actually turns out to be true, and if a market for his product actually exists. His product is not NEW, and all we have to make us think it is any different is a lab report. And if he has to build a blending site to differentiate himself.. well that is a bit of a RED FLAG.

GAME OVER

I find that hard to believe personally. All IMO. But being an oil refinery operator is not that different from being a nuclear plant operator. Nuclear operators make easily 6 figures in terms of salary. Depends if we are talking about the same thing. Being responsible for he safe operation of a plant that coul;d explode, leak radiation, melt down... they have to know every piece of equipment, understand every gauge... every readout, know every alarm, every condition... etc.

i know it is personal. that is why i asked for a range,, was not asking for a number.

seems like a desperate act... "survival options"?

JB is like the bad guy in a Batman movie that can't just shoot the Bat and get it done with.

Just go sell some fuel John.

and if you really want to define "ripple effect", post the Janice Shell article on SwingTrade... and brace yourself.

whatever you do, don't post this on the Swingtrade Board. One person did, quite innocently and was summarily destroyed. Makes for interesting reading. Harmnless little post hardly worthy of that kind of vitriol I would say... but what else have they got to occupy themselves with, certainly not JBII...

i have quite a bit of info now and had a quick scan of the links. i will work it up as best i can. remember that with estimating, a lack of information and/ or detail will almost always lead to a lower estimate.

I was a Controller for a construction job on a refinery. I believe you about the rules, but one would think those rules could be worked around...

anyway, what you are saying is likely true, which is the same thing I am saying in a different way. It conflicts with their core business. I know that the way the plant was built, that even if it was built 2% out of tolerance, it might as well not have been built from an efficiency point of view. If that is the case, than operations must be optimized as much as possible, including the feedstock they accept, and logistics around the plant.

By the way, what kind of salary ranges are these operators in at the plant? In other words, how much do they make?

"Operator" implies operating the plant. In other words, watching the control system readouts and indicators and making adjustments as necessary to keep the system operating SAFELY and as efficiently as possible. Requires knowledge of the system's operating principles and control system. Some basic educational requirements as well..

Cost to the company, not paid salary or paid hourly rates.

I need a large cocktail napkin, because I tend to see the glass as half full... not half empty.

"that's a large cocktail napkin, but thanks"

Interesting reading. More info for my second attempt at debunking your bunk. I have a couple of other references as well..

I am sure I can get it up to at least $12/hour. After all, we started at $10, now we are at $11... it is only logical.

And I believe that yours is as long as mine.. (the message, that is).

I am off to my bunk.

thanks tech. I will have to come back to this. I have not looked at it yet. What I am really hoping ti includes is a list I saw where JB does a breakdown of that 10/hour figure...

Perhaps this is one of the ways that JB is misleading or just being simplistic. I am quite confident about that cost, and in this case I am lowering it to $80 just to be sure it is reasonable.

As previously posted, I worked in a consulting firm and then in an industrial company (Fortune 500, NYSE), where I had to do Project Costing for engineering projects using Engineers and other such folk.

Consulting firms make this very complicated because their business is based on billing rates. Everybody has a different rate, and they bill up to $150/$200/hour. They play lots of games with who bills to what to make projects profitable.

Now the industrial company was a different matter. They liked to keep things simple for analysis purposes. Therefore, they used the figure of $100/hour for professional people (engineers, management, white-collar types).

I can't really break that number down, but I know it is real and reasonable. Salary is maybe 70-90k/year or 60-70/hour. An hourly rate can be doubled and multiplied by 1000 to get a yearly salary number.

Fringe = vacation & benefits & the like

Overhead is exactly that...

It all adds up to 100/hour believe me. In fact, when I left, we were just increasing it to 120.

If JB was thinking he was going to hire some kid out of McDonalds to give him a step up and thinking salary alone, well he was not being realistic.

And an "Operator"? That is a very special person that is usually highly trained. Any operator has a safety responsibility and is paid appropriately. I know that operators in a nuclear plant are the highest-paid people in the whole plant. Big bucks.. now this is not a nuclear plant, but these are not going to be idiots either.

And that number is not to compensate for the building or plant.. just the person.

he is in the iHUB JAIL. it is for people who have been bad posters or who have not followed the rules. It is a board. Type Jail in and the board will come up.

mod is incarcerated.

funny cartoon though eh?

hint: it has nothing to do with anything anyway...

I thought I made an entry to this list..

"When Pigs can Fly".

Don't see it.. oink.

see my most recent post.

ThHe cost of an employee, whether he is paid hourly or not, is approximately $100/hour.

This is composed of base salary, fringe (vacation., benefits), and Overhead. That was the number we used for all cost analysis for professional people.

Any construction project of this nature is going to have some Engineering costs because there will always be some customization for each installation. If you look in the 10K you will see the numbers spent on this initial installation. In the future the numbers will be less, but there will always be some. JBI has to develop a notion of "product", that is something they can sell which will be flexible to adapt to different customers, but that minimizes the amount spent on Engineering.

I think making fuel from plastic would be great PR for big oil companies. They could have a procesor at one of their refineries and allow people to dump their plastic waste. The fact that they do not is a "red flag" for me. I must assume that it is just not profitable and maybe conflicts with their core business. I mean that in the sense that it cannot go into a regular refinery process with the rest of the crude (another Red Flag for me). Likewise though, car companies have never been too interested in green vehicles until now. Reason: that is not what their customer wanted, not what they cared about, and not profitable. The heck with the environment (was their attitude..) Strictly profit motive.

The cost of the building would not be included, as I just posted. But, it should occupy minimum floor square footage.

Air conditioning would be included in O/H,. LOL>>

Turning point?

see my post. help me with my questions.... if I can be convinced they can make fuel for SIGNIFICANTLY less than $45/barrel cost... I just may get interested, but still question the market for that fuel.

Anybody can be very helpful if they point me to the links for?

- JB's list of costs included in the 10$/barrle number. I know there is a list.

- where the number of 110 barrels/day comes from. What were the assumptions for # of lines, shift pattern, etc...

- the statements regarding Labour (Operators). How many lines was require 2 operators.. etc.

and btw, that was the 2M PIPE (at 4$.. ), not the 4M PIPE.. lol..

lastly, Material Costs.. - cost of feedstock (I will assume it is free for all the trouble it is worth)., other, cost of catalyst.

I will give it my best shot.

In thinking about this, the approach I have decided to use is to look at it as a capital project and on a Capital Budgeting basis. In other words, if I were working for a company proposing an invesrtment in P2O, would I go forward based on the ROI capability of the project? It really does not matter if it is internal, or a P2O Venture partner buying the P2O setup, or whatevver. The amount of money involved is going to be the same regardless.

Also, I just finished reading the 10K and there is some useful information there. Besides that, maybe some of you more into this company can answer some of the detail questions that come up.

First I must observe.. boy are they losing alot of money. That 4M PIPE was essential for them to be able to continue. That is very clear now. In fact, without it, they would be sunk. Makes me wonder, what with the timing of the stock upswing and all. They certainly needed to be able to sell that PIPE at a discount to market when it HAD some market value. Certainly they could not sell it now.

Staggering numbers:
Revenue Loss
Q2 3.7 M 2.M
YTD 7.3M 5.3M

Mostly non-recurring, but still... recurring costs are 1M/quarter... 2M in cash...

so they have to get it going in a big way within this quarter i would say... The fact they are debt-free is good, but maybe that means the banks just won't deal with them, I wonder if they could get a loan...

Anyway back to the task at hand. There are 3 possible approaches in looking at a capital project, Net Present Value (NPV), Internal Rate of Return (IRR), or Payback Period.
In my previous work experience we used to use IRR, so that is the one that I will use. it simply answers the question, what kind of annual Rate of Return do I need to justify a one-time initial investment?

The initial investment I will take to be $2M.

That is based on the initial configuration of:
- 3 20T p2O machines
- associated shredder, granulator, and gas compression system

Previously I have estimated the cost of the P2O system at between 1 and 2M. I am upping it to 2M because it is 3 P2O machines. That is his initial configuration.

My reasoning is just comparing it to other and similar projects I have worked on. One project was for a plant involving a storage tank and a liquifier that was worth about 12M. This plant is about 1/10 the size. So, it is simply Analogous Estimating on my part..

So we better understand, this is a quote from an old textbook on this initial cost:

"Cost of equipment, facilities, and land purchased. All other costs related to the investment (transportation, installation, additional personnel, and so forth.
adiitonal net working capital required. Opportunity costs."

Ok, for this purpose forget the land and the opportunity costs. However, I have mentioned before that the plant does appear big and not ready to be commercialized. Consumption of plant space is an issue (opportunity Cost/Lost for the JV partner). It would likely attract Overhead on a square footage basis. It needs to be compact.

Consider that in the last few years intensively in this business I have seen a consistent cost structure to these projects consisting of:

Project Management
Engineering
Equipment
Construction
Startup/Commissioning

There is cost in each one of these areas, some of which are given in the 10K. The figures given in the 10K for what he has spent on some of the above back me up, thney are abourt proportionately correct. It details what was spent on Engineering for the existing plant from Islechem, and for some pieces of equipment like the shredder and the granulator.

I will also assume a Rate of Return of 25% annually. The text book says anything above the Cost of Capital, but that is not realistic. In my previous work, it had to be at least 20% to be of interest. Usually it was higher, between 20 and 30%.

So, using an Internal Rate of Return formula, you will find that they need to generate about $800k/year in Profits to make this a sensible investment. That assumes a 5-year economic life. Simply take that cash flow and work it back discounted at that rate. That would take care of the plant itself, and build in a nice return, we no longer need to consider it in our costing.

That is Net Cash Flow. Profit, not Revenue, Revenue Minus Costs.

I have read the figure of 110 bbl/day. Not sure if that applies to 1 line or 3. Assuming 1 line and revenue of 70/barrel, that is 7700/day in revenue. It turns out that if the cost is 45/barrel, profit is 2750/day. Assuming 300 working days/year, the resulting profit will be about $800k/year, which fits the bill.

So, my numbers appear correct, because I believe that the oil industry assigns an exploration cost of $45/barrel to each barrel of crude. That is their cost of capital, so it seems reasonable. I used to have a pie chart which broke down the costs for a barrel of oil. I can't find it, but I believe that exploration was $45. Uplift cost was $5. Profit was a further $5 or $20. Can't find it now.

I am making alot of assumptions here, I don't know if he has a 24/7 operation. I just assumed 300 working days a year. Basically 24/7 minus important holidays.



SO what are the costs, and does the number of 45 seem accurate?

Forgetting about the capital equipment now, we have: Direct Labour, materials, and Overhead.

I can't really pursue the analysis because of a lack of specifics, but I can show how it adds up quickly, and that to say 10 is not reasonable... I would say he is on a par with the cost structure of the industry, perhaps maybe with a $10/barrel cost advantage.

For example labour. We used to use a figure of $100/hour for a professional person (Engineer, Tech, whatever). This is what a person COSTS to a company, not their salary. It includes fringe (vacation), and Overhead costs associated with having a person sitting in a desk...

Each line requires 2 operators, if I am not mistaken. These are not high school kids. They need to be fairly responsible and will require training. Using a figure of $80/hour and a 24/7 operation, their daily cost is 80X24X2 = almost $4000. So if that is for 110 barrels, that is $35/barrel. Add 5 for material and 5 for Overhead, you are right up there...

Material would be: the catalyst. and some other stuff...

anyway, you guys can help me out... what does the 110 barrels/day figure apply to? 1 line? 3 lines? 24/7? a regular 8-hour shift? How many operators do they need in a 3-line configuration?

anything else can help.

the phrase "tentatively scheduled" could mean they are waiting on the DEC, but IMO likely not. It more likely means that they scheduled a firm date and targeted being ready for that date. Then if they were not ready, they cancel and set a new date. Best way to be fair to everybody. I don't think the government is in the business of holding up business from being able to operate.

That is how I would handle it if I were managing the project, which is what I do.

On one of my previous projects the lead time for a permit for construction was 6 months. You either got your paperwork in, or you were screwed, and it was no one's fault but your own.

JBI has had lots of time. There is no excuse for them blaming the government for being late to the larty.